How big a deal will Texas make to lure investment and jobs?

How much can Texas offer to a behemoth corporation in hopes of luring investment and jobs?

As Texas' metro areas compete for Amazon's $5 billion, 50,000-employee second headquarters, economic development leaders will inevitably face questions about incentives: How much can Texas offer to a behemoth corporation in hopes of luring investment and jobs? And how much should state and local leaders pony up? Wisconsin recently gave the green light to a $3 billion incentives deal that observers say raised expectations for Amazon's demands — for better or worse.

Upping the ante

Foxconn, the Taiwanese giant that builds iPhones and other devices, sent states scrambling when it announced that it planned to invest as much as $10 billion to bulk up manufacturing in the U.S. Ultimately, Wisconsin won with a controversial incentive package that had to be approved by state lawmakers. If Foxconn keeps its promises in terms of investment and hiring, it will be eligible for:

Up to $1.5 billion in state income tax credits tied to creation. (It's expected to create 13,000 jobs)

Up to $1.35 billion in state income tax credits for capital investment (Foxconn's expected to invest $10 billion.)

$150 million in sales tax exemptions for construction materials.

TOTAL: $3 billion

A bargain?

So are economic incentives bigger in Texas? It remains to be seen. Back in 2014, one of the state's most high profile corporate scores came in the form of Toyota's North American headquarters. The state offered just a fraction of the Wisconsin number: $40 million, still Texas Enterprise Fund's largest grant. Plano kicked in $6.75 million. The full value of the city's agreement to knock off half of Toyota's business and property taxes is unkown. City officials did not respond to requests for comment in time for publication.

$40 million Texas Enterprise Fund

$6.75 million grant from the city of Plano

$17 million tax abatements from city of Plano, based on initial property value estimate of $350 million.

TOTAL: $63.75 million tied to employment of 3,650 people and investment of $350 million.

"We don't have a personal income tax, we don't have a corporate income tax, so it affords Texas the ability to be more judicious and thoughtful with our incentive packaging. We don't have to give a $3 billion incentive package like Wisconsin."

— Robert Allen, president and CEO of the Texas Economic Development Corporation

A different model

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But some of Texas' biggest economic incentive deals don't involve any state money. The Colony lured the massive Nebraska Furniture Mart by offering it a tax abatement package to match the sheer size of what was billed as the largest furniture store in North America. Here's how that deal worked:

$291 million for roads, upgrades for utilities and an on-site parking garage

$261 million to offset some of the store's building expenses

$250 million for a second "super" store if The Colony and Nebraska Furniture Mart managed to lure one

TOTAL: $802 million to be paid over 40 years using local sales and property tax revenue from the site

"It'll be fascinating to contrast whether Amazon will ever be honest about what matters the way [Toyota's North American CEO] Jim Lentz was about what matters ... I think incentives will be marginal to immaterial."

— Greg LeRoy, executive director of the nonprofit Good Jobs First, which advocates for accountability in relocation incentives

Big deal closers

Texas Enterprise Fund is the state's so-called deal closer fund. Here are companies that received the 10 biggest grants from the fund in 2016 and 2017.

TEXAS ENTERPRISE FUND INCENTIVES

The state has offered grants totaling over $56 million to 20 companies for expansion or relocation in 2016 and 2017. They're ranked by size of grant.

"It's odd and interesting that incentives are simultaneously a baseline requirement and unimportant for corporations considering big moves. Whatever Amazon does for its HQ2 will signal whether billion-dollar incentive packages like Foxconn's are the new norm."

Laurie Joseph. Laurie Joseph is a graphic artist and designer with more than 25 years' experience working for newspapers.
Laurie has worked for the Dallas Morning News as a graphics editor, artist and copy editor. Prior to that, she was a page designer at the Fort Worth Star-Telegram.

Jill Cowan. Jill Cowan tracks Texas’ economy and how it shapes life in the Lone Star State. She also writes about the region’s shifting demographics.
Previously, she’s covered everything from wildfires to state politics for The Tennessean, the Los Angeles Times and its community newspapers and The Bakersfield Californian. She graduated from UC Berkeley.